"Unlocking" refers to removing restrictions that a carrier places, which can prevent you from switching carriers. "Jailbreaking" refers to gaining access to run non-authorized apps, freeing you from OEM restrictions; e.g. Apple, Inc.'s (AAPL) demand that its users only run apps from its first-party App Store. "Rooting" refers to the practice of making yourself the administrator of your device, which allows you in turn to jailbreak or unlock it.

The LoC's 2006 and 2010 decisions seemed to open the door to users having greater control over the devices they legally purchase, but they were only temporary.

And in its latest review, the LoC's Librarian sided with OEMs like Apple that want to re-restrict their devices. The new ruling bans unlocking in cases where the device maker (e.g. Apple) does not authorize it. Enforcement and penalties are dictated under the Digital Millennium Copyright Act of 1998.

After January it will be illegal to unlock devices like the iPhone. [Image Source: Engadget]

The Librarian did offer up a permanent exception for jailbreaking on smartphones.

II. Unlock? You May be Sent to Prison

The maximum allowable punishment for so-called "willful circumvention" for profit (e.g. iPhone unlockers who sell their unlocking software) is $500K USD and 5 years in prison for the first offense, and $1M USD and 10 years in prison for subsequent offenses [see: 17 USC § 1204 - Criminal offenses and penalties].

Not-for-profit circumvention tools generally falls under 17 USC § 1203. The good news is that there's no prison time for that; the bad news is that the court decides an arbitrary "actual damages" estimate of how much the circumvention "hurt" the plaintiff's business. That means that in theory Apple could sue jailbreakers/unlockers and claim hundreds of thousands, if not millions in damages, which the defendants could be required to pay, even if they didn't make a single dollar off their tools.

Unlocking smartphones for profit can earn you up to 10 years in prison, starting in January. [Image Source: Banmiller on Business]

Under the statute, even those just using the tools could face lesser, but significant fines.

As for unlocking tablets, the Librarian, "found significant merit to the opposition’s concerns that this aspect of the proposed class was broad and ill-defined, as a wide range of devices might be considered 'tablets,' notwithstanding the significant distinctions among them in terms of the way they operate, their intended purposes, and the nature of the applications they can accommodate. For example, an e-book reading device might be considered a 'tablet,' as might a handheld video game device or a laptop computer."

In other words, the Librarian argues it's too hard to define what a tablet is, so no unlocking or tablet jailbreaking exemptions should be allowed for now.

The new rules take hold in January 2013, so you will have approximately 90 days of leeway under the current rules, before unauthorized unlocking becomes banned.

From there on out, though, if you develop and publish tablet jailbreaking or smartphone/tablet unlocking tools you could wind up paying hundreds of thousands, if not millions in damages, if the OEMs whose products you're modifying discover your identity. And if you sell your circumvention tools, you may wind up serving up to 10 years of hard time.

The EFF and others will have the next three years to work on their arguments for the Librarian, as the policy will next be re-reviewed in 2016.